It is called Russia’s Davos - an annual summer solstice gathering where foreign company heads mix and mingle under one roof in St. Petersburg. With the British rocker Sting playing to the crowd, the Kremlin plans it as a lovefest for financial types. But this year, there was some love loss as sharp words were exchanged.
Arriving by express train and charter plane, hundreds of corporate executives converged on St. Petersburg Thursday for their chance to meet Russian government officials in a more casual, relaxed atmosphere.
But as a cold rain blew in from the Gulf of Finland, some harsh words were heard at a packed panel on Russian-American economic ties.
U.S. Ambassador John Beyrle said Russia has a hard time persuading foreigners to invest their money here because Russians are taking their money out.
“The sustained net capital outflows this year alone are already above $30 billion. That figure should alarm, should frighten everyone in this room. Because it’s an indicator that things are not going in a direction we need them to go,” he said.
The U.S. ambassador then raised a sensitive topic - one that is not on the three-day agenda here. “Obviously the fight against corruption is job number one,” Beyrle said.
The U.S. envoy praised Russia’s recent passage of anti-bribery laws, but he said he was disappointed that the proposal for an anti-corruption panel was vetoed by organizers of what is officially called the St. Petersburg International Economic Forum.
The ambassador also said that U.S.- Russia economic relationship remains anemic. He said Russia only accounts for one percent of America’s international trade, and half of one percent of America’s foreign investment.
Hans-Paul Buerkner, president of the U.S. firm the Boston Consulting Group, said U.S. companies that persevere in Russia often earn big profits.
“Those who really see the potential in Russia, who make the efforts will be extremely successful and have done so. And work very profitably,” Buerkner said.
The Russians also had their share of criticism.
Alexei Mordashov, majority owner of Severstal, Russia’s largest steel producer, said he received tax incentives to invest in American steel plants, but he encounters tariff barriers for his Russian-made steel products to the U.S. market.
Although, he says, he recognizes that the Obama administration is helping Russia on its application to the World Trade Organization, he complained that Russia first applied 18 years ago - breaking China’s record of 14 years.
David Iakobachvili, president of the Russian-American Business Council, tried to smooth over the exchange of sharp barbs by calling for construction of a road and rail bridge across the Bering Strait, linking Siberia and Alaska.
The Russian businessman has good reason to have warm feelings about the United States. Last December, PepsiCo agreed to pay $3.8 billion for Wimm-Bill-Dann, a Russian food and beverage company controlled by Iakobachvili. It was the biggest American investment in Russia since last year’s economic forum in St. Petersburg.